Complaince Simplified

If you are among those taxpayers who have not yet filed their income tax return (ITR) for the financial year 2016-17, or the assessment year (AY) 2017-18, you must have received emails and messages from the income-tax department reminding you to file the tax return by 31 March 2018. You must remember that if you had income that was above the exempted limit during FY2016-17, then it is mandatory for you to file a tax return. If you had income that was less than the threshold limit for taxes to apply, but you deposited a considerable amount of cash in your bank accounts during the demonetization period, you should file a tax return.

What’s different this time around is that unlike previous AYs, when late tax returns could be filed even one year after the end of the relevant AY, now if you don’t file the ITR for the AY 2017-18 by 31 March 2018, you won’t be able to file it later.

What’s a late tax return

The last date to file tax returns is usually 31 July of each AY. Assessment year is the year in which we assess income, pay taxes and file tax return for the previous year or the financial year. So, for financial year 2016-17, the AY is 2017-18.

The last date to file the tax return for financial year 2016-17 was 31 July 2017, which was later moved to 5 August 2017. A tax return filed after the due date of that year is considered belated return.

The Central Board of Direct Taxes (CBDT) has decided to give a last chance to persons who have not filed income tax returns for the last two years. An advisory issued by the Board last day said that such persons can file income tax returns by 31st March 2018.

“Income Tax Department has identified a large number of persons who have not filed income tax returns for the assessment year 2016-17 and 2017-18 although they have made high-value transactions or deposited; a large amount of cash in bank accounts,” the Board said.

Belated return: disadvantages

Not filing a tax return on time has consequences, and you will lose out on some benefits.

For starters, there are penalties and interest levied on the income tax that was due. “The person who files a belated return for AY 2017-18 may be subject to a penalty of Rs5,000 under Section 271F of the Income-tax Act, 1961,”

Apart from the penalty, interest too may be levied under various sections. “If any tax is due, interest may have to be paid under sections 234A, 234B and 234C of the Act,” said Gupta.

From the next AY, 2018-19, a fixed amount of penalty will be charged on belated tax returns. “Section 271F will get replaced by section 234F, which prescribes a late fee of Rs5,000 if the return is filed after due date and up to 31 December, and Rs10,000 (from 1 January) up to 31 March of AY. However, if the total taxable income of a person doesn’t exceed Rs. 5 lakh, late fee shall not exceed Rs1,000,”.

If there is any refund, it may be delayed and taxpayers will not receive interest on refund from 1 April of the AY. Interest will be paid from the date on which the tax return was furnished till the date on which refund is granted. “If return is filed within the due date, interest is paid effective 1 April of the AY to the date on which refund is granted,”

The following persons are required to file income tax return mandatorily,

All Companies, Partnership Firms, LLPs Trusts, Associations, Political Parties (whose income prior to claim of exemptions exceeds the minimum chargeable to tax)

Individuals and HUFs having income more than Rs. 2.5 lakhs (For Senior Citizens, Rs. 3 Lakhs (Age 60 Years up to 80 Years) and Rs. 5 Lakh (Age 80 Years or More)) .

It further said that “If you have deposited large amounts of cash in your Bank account, or made high-value Transactions, Please consider the same while filing your income tax returns. Non-filing or incorrect filing of return of income may result in penalty and prosecution.”

According to the CBDT Advisory, belated returns for the assessment year 2016-17 and 2017-18 and revised returns for the assessment year 2016-17 (with interest, if any, for late filing cannot be filed after 31st March 2018).

Last Chance: File ITR for FY 15-16 & FY 16-17

It is said , “Better late than never” which applies to many situations in life. However, everything has a time limit and some dues must be made and postponement becomes an option no longer. The government has made considerate concessions for tax payers who have failed to file their tax returns from previous years. However, belated returns of previous years must be filed by March 31st 2018, else risk paying penalties.

Filing Belated Returns

Previously, if you had forgotten or failed to file your tax returns with thin the due date of 31st July, you still had two years (from the end of the relevant financial year) to file your belated returns.

For example if you had not filed your tax return for F.Y. 2015-16, then you would still be able to file till 31st March 2018. However, as per the recent amendment, for returns for F.Y. 2016-17, the deadline for filing your belated tax return is 31st March 2018. The procedure for filing belated returns is the same as filing a regular return, except with the change in assessment year.

If you fail to file your return, you may receive an inquiry notice u/s 142(1) or a notice for escaping assessment u/s 148, asking for clarification on the delay in filing and allowed the opportunity to file before the date given in the notice. If, however, you ignore the notice, then you face a penalty of 50% – 200% of the tax payable in addition to the penalty for non-filing.

Moreover, u/s 139(5) you can revise your returns filed earlier within one year of the relevant assessment year. So, for F.Y 2016-17, you can file this return till 31st March 2018 and revise it until 31st 2019.

Penalty for Non-Filing

The penalty for belated returns was Rs 5,000 u/s 271(F). However, after the amendment, for A.Y. 2018-19 the penalty amount for non-filing of belated returns will be Rs 5,000 if filed before December 31st of A.Y and Rs 10,000 if filed between January 1st– March 31st A.Y. For people whose income falls below the taxable income bracket, then the late fee will not cross RS 1,000.

Merely Paying the Tax Amount or TDS

Merely paying the due amount of tax is not sufficient. In addition, the Income-tax rules require a taxpayer to also file return, irrespective of whether tax is due or not. Therefore, for all those with income above the exempted limit, tax return filing within the due date is a must.

Every year, July 31 is the date by which taxpayers are supposed to file their I-T returns (ITR). The deadline for the assessment year 2016-17 which pertains to income earned in the financial year 2015-16 was extended till August 5, 2016

“With less than 3 per cent of people in India filing tax returns, the perception amongst most is that since TDS (tax deduction at source) has happened, filing of tax returns is not important. Many taxpayers also often take it easy as an income-tax return for FY 2015-16 can be filed by March 2018.”

If you are likely to miss even the extended deadline for filing income tax returns this year then you must be worried as to what can be done about it now.

Yes, you heard it right. This is a warning bell if you are over with the budget 2018 updates. It’s time to check whether your income tax return is filed or not.

If you were not able to file your return within due date, then Income Tax gives you chance to file belated return section 139(4) of Income Tax Act 1961.

Provisions of Sub section 4 of Section 139 read as follows (up to Finance Act, 2015) [relevant for Assessment Year 2016-17/Financial Year 2015-16]

”As per Section 139 (4) Any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a notice issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier :”

“Provisions of Sub section 4 of Section 139 were changed by the Finance Act, 2016, w.e.f. 1-4-2017 [relevant for Assessment Year 2017-18/Financial Year 2016-17]:

(4) Any person who has not furnished a return within the time allowed to him under sub-section (1), may furnish the return for any previous year at any time before the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.”

Sushil Kumar Modi said requirement for intra-state movement of goods of more than Rs 50,000 value would be introduced in phases

The GST provision requiring transporters to carry an electronic way bill or e-way bill when moving goods between states should be implemented from April 1, a group of state finance ministers recommended on Saturday.GoM head and Bihar Deputy Chief Minister Sushil Kumar Modi said the requirement for intra-state movement of goods of more than Rs 50,000 value would be introduced in phases after assessing the response for inter-state movement.

We recommended that from 1st April 2018 E-Way bill should be made mandatory. This is subject to the approval of GST Council: Sushil Modi at the GoM (Group of Minister) to resolve IT challenges faced in GST implementation #Delhi pic.twitter.com/PtH0vt5Hv7

— ANI (@ANI) February 24, 2018

After implementation of the Goods and Services Tax (GST) from July 1, the requirement of carrying e-way bill was postponed pending IT network readiness.

It was implemented from February 1 but the system crashed and its implementation was deferred.Modi said the recommendation of the panel would be considered by the GST Council at its meeting on March 10.

26 to 30 Lakh E-Way bills are expected to be generated when we are expected to implement E-Way bills by 1st April 2018: Sushil Modi, Deputy CM & Finance Minister of Bihar at the GoM (Group of Minister) to resolve IT challenges faced in GST implementation #Delhi pic.twitter.com/GyEFrPzuhH

— ANI (@ANI) February 24, 2018

Besides plugging tax evasion, the e-way bill is supposed to boost revenues by 15-20 per cent.E-way bill is an electronic way bill for movement of goods which can be generated on the GSTN (common portal). Movement of goods of more than Rs 50,000 in value cannot be made by a registered person without an e-way bill.The e-way bill can also be generated or cancelled through SMS. When an e-way bill is generated, a unique e-way bill number (EBN) is allocated and is available to the supplier, recipient, and the transporter.

The reduction in the base GST rate and removal of cess should provide impetus to growing the industry and especially to the organized sector, say executives.

The decision to reduce tax and remove cess on the sale of used vehicles is expected to boost the pre-owned car market, industry executives said.

The GST Council on 18 January decided to reduce the goods and services tax (GST) on used cars to 12% and 18% (depending on the size of the vehicle) from the existing 28%, and scrap the cess (varying from 1-15%). The new rates will be applicable from 25 January.

Under GST, tax and cess on new and old vehicles were the same—28% GST plus 1-3% cess on small or compact cars, and 28% GST and 15% cess on medium and bigger cars or sports utility vehicles (SUVs). These were levied on the profit margin of the used car dealers, putting sales volumes under pressure and made their business unviable.

The segment had already been under pressure since demonetization in November 2016. Only 15% of the used car market operates from organized dealerships, according to a study conducted by Mahindra and Mahindra Ltd.

According to Nagendra Palle, managing director and CEO at used car seller Mahindra First Choice Wheels, due to the high GST on larger vehicles, the sales of those vehicles fell by 25%.

“A very positive move, relative to what it was before the change. Prior to this change, the effective GST rate was in the range of 29% to 53% on the gross margin including mandatory cess.

At these tax rates, the organized used car business was challenged and would have been negative for the entire industry. The reduction in the base GST rate and removal of cess is a very welcome change and should provide impetus to growing the industry and especially to the organized sector,” explained Palle.

According to the ‘India Pre-owned Car Market Report 2017’ published by Mahindra and Mahindra in September 2017, almost 70% of the all vehicles sold in the used car market are small cars priced under Rs4 lakh. The reduction of tax is expected to help the sector.

According to a research done by CarDekho, one of the leading digital platforms for buying and selling second-hand vehicles, the used cars business should grow from $18 billion to $60 billion in the next five years.

“Removal of cess, according to us, is a great initiative since it has decreased the tax rate incidence from pre-GST era. This will definitely outpace the new car industry growth rate and carve the perfect opportunity for used cars to grow as a segment,” said Rajat Sahni, CEO, used cars, CarDekho.

“I am glad that the government acknowledged that the tax structure around the used vehicle category has to be different from new vehicle category and removal of cess is a welcome change. Secondly, whether you own the inventory of used vehicles or not, as a seller, one uniform 18% GST structure is a clear simplification of taxes,” said Sandeep Aggarwal, founder and CEO of Droom, an online market place to buy and sell used cars.

“A used car dealer is paying the same amount of tax levied on a new car on his profit margin. This was killing the used car market. It is good that the government has taken note of this and decided to reduce the taxes. This will make the business more viable,” said Jain.

India’s automobile industry is one of the fastest growing in the world and it is already the sixth largest globally. According to a Society of Indian Automobile Manufactures (SIAM) report, annual car sales could reach more than 9 million vehicles by 2020. Till about a decade ago, in the absence of organized players, more than 60 percent of all used car sales were C2C (customer to customer) among friends and relatives etc.

According to estimates in the US, for every new car sold, around three used cars are sold. In Europe, this ratio is 1:2, while currently in India it is 1:1.3. At present, the second hand car market in India is largely unorganized and fragmented. In India, organized dealers account for 19 percent of the total used car market, with the semi-organized segment contributing 52 percent and unorganized dealers 29 percent.

Let us discuss in this article the Impact of GST on Buying / Selling a Used Vehicle. Since the transactions happen in different ways, broadly as below, we shall discuss the impact of GST accordingly.

Normally GST is charged on the transaction value of the goods.
However, in respect of second hand goods, a person dealing is such goods may be allowed to pay tax on the margin i.e. the difference between the value at which the goods are supplied and the price at which the goods are purchased. If there is no margin, no GST is charged for such supply. The purpose of the scheme is to avoid double taxation as the goods, having once borne the incidence of tax, re-enter the supply and the economic supply chain.

Valuation of Second Hand Goods:
As per Rule 32(5) of the CGST Rules, 2017, where a taxable supply is provided by a person dealing in buying and selling of second hand goods i.e., used goods as such or after such minor processing which does not change the nature of the goods and where no input tax
credit has been availed on the purchase of such goods, the value of supply shall be the difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored.

The proviso to the above rule further provides that in case of the purchase value of goods repossessed from a unregistered defaulting borrower, for the purpose of recovery of a loan or debt shall be deemed to be the purchase price of such goods by the defaulting borrower reduced by five percentage points for every quarter or part
thereof, between the date of purchase and the date of disposal by the person making such repossession.

In this regard, Notification No.10/2017-Central Tax (Rate) New Delhi, dated 28th June, 2017 exempts intra-State supplies of second hand goods received by a registered person, dealing in buying and selling of second hand goods and who pays the central tax on the value of outward supply of such second hand goods as determined under sub-rule (5) of rule 32 of the CGST Rules, 2017, from any unregistered supplier, from the whole of the central tax levied under the CGST Act, 2017. Similar exemptions are also there in respective SGST Acts.

Illustration:
For instance, a company say M/s FirstSource Ltd, which deals in buying and selling of second hand cars, purchases a second hand Maruti Celerio Car of March, 2014 make (Original price Rs. 5 lakhs) for Rs. 3 lakhs from an unregistered person and sells the same after minor furbishing in July, 2017 for Rs. 3,50,000/-.

The supply of the car to the company for Rs. 3 lakhs shall be exempted and the supply of the same by the company to its customer for Rs. 3.5 lakhs shall be taxed and GST shall be levied. The value for GST purpose shall be Rs. 50000/-, i.e.the difference between the selling and the purchase price of the company.

In case any other value is added by way of repair, refurbishing, reconditioning etc., the same shall also be added to the value of goods and be part of the margin.

If margin scheme is opted for a transaction of second hand goods, the person selling the car to the company shall not issue any taxable invoice and the company purchasing the car shall not claim any ITC.

I am directed to issue clarification with regard to the following issues approved by the GST Council in its 25th meeting held on 18th January 2018:-

Sr. No.

Issue

Clarification

1.

Is hostel accommodation provided by Trusts to students covered within the definition of Charitable Activities and thus, exempt under Sl. No. 1 of notification No. 12/2017-CT (Rate).

Hostel accommodation services do not fall within the ambit of charitable activities as defined in para 2(r) of notification No. 12/2017-CT(Rate). However, services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent are exempt. Thus, accommodation service in hostels including by Trusts having declared tariff below one thousand rupees per day is exempt. [Sl. No. 14 of notification No. 12/2017-CT(Rate) refers]

2.

Is GST leviable on the fee/amount charged in the following situations/cases: –(1) A customer pays fees while registering complaints to Consumer Disputes Redressal Commission office and its subordinate offices. These fees are credited into State
Customer Welfare Fund’s bank account.

(2) Consumer Disputes Redressal Commission office and its
subordinate offices charge penalty in cash when it is required.

(3) When a person files an appeal to Consumers Disputes Redressal Commission against order of District Forum, amount equal to 50% of total amount imposed by the
District Forum or Rs 25000/- whichever is less, is required to be paid.

Services by any court or Tribunal established under any law for the time being in force is neither a supply of goods nor services. Consumer Disputes Redressal Commissions (National/ State/ District) may not be tribunals literally as they may not have been set up directly under Article 323B of the Constitution. However, they are clothed with the characteristics of a tribunal on account of the following: –(1) Statement of objects and reasons as mentioned in the Consumer Protection Bill state that one of its objects is to provide speedy and simple redressal to consumer disputes, for which a quasijudicial
machinery is sought to be set up at District, State and Central levels.

(2) The President of the District/ State/National Disputes Redressal Commissions is a person who has
been or is qualified to be a District Judge, High Court Judge and Supreme Court Judge respectively.

(3) These Commissions have been vested with the powers of a civil court under CPC for issuing summons, enforcing attendance of defendants/witnesses, reception of evidence, discovery/production of documents, examination of witnesses, etc.

(4) Every proceeding in these Commissions is deemed to be judicial proceedings as per sections 193/228 of IPC.

(5) The Commissions have been deemed to be a civil court under CrPC.

(6) Appeals against District Commissions lie to State Commission while appeals against the State Commissions lie to the National Commission. Appeals against National Commission lie to the Supreme Court.

In view of the aforesaid, it is hereby clarified that fee paid by litigants in the Consumer Disputes Redressal
Commissions are not leviable to GST. Any penalty imposed by or amount paid to these Commissions will also not attract GST.

3.

Whether the services of elephant or camel ride, rickshaw ride and boat ride should be classified under heading
9964 (as passenger transport service) in which case, the rate of tax on such services will be 18% or under the heading 9996 (recreational, cultural and sporting services) treating them as joy rides, leviable to GST@ 28%?

Elephant/ camel joy rides cannot be classified as transportation services. These services will attract GST @ 18% with threshold exemption being available to small service providers. [Sl. No 34(iii) of
notification No. 11/2017-CT(Rate) dated 28.06.2017 as amended by notification No. 1/2018-CT(Rate) dated 25.01.2018 refers]

4.

What is the GST rate applicable on rental services of self-propelled access equipment (Boom Scissors/ Tele handlers)? The equipment is imported at GST rate of 28% and leased further in India where operator is supplied by the leasing company, diesel for working of machine is supplied by customer and transportation cost including loading and unloading is also paid by the customer.

Leasing or rental services, with or without operator, for any purpose are taxed at the same rate of GST as applicable on supply of like goods involving transfer of title in goods. Thus, the GST rate for the rental
services in the given case shall be 28%, provided the said goods attract GST of 28%. IGST paid at the time of import of these goods would be available for discharging IGST on rental services. Thus, only the value added gets taxed. [Sl. No 17(vii) of notification No. 11/2017- CT(Rate) dated 28.6.17 as amended refers].

5.

Is GST leviable in following cases:(1) Hospitals hire senior doctors/ consultants/ technicians
independently, without any contract of such persons with the patient; and pay them consultancy charges, without there being any employer employee relationship. Will such
consultancy charges be exempt from GST? Will revenue take a stand that they are providing services to hospitals and not to patients and hence must pay GST?

(2)Retention money: Hospitals charge the patients, say, Rs.10000/- and pay to the consultants/ technicians only
Rs. 7500/- and keep the balance for providing ancillary services which include nursing care, infrastructure facilities, paramedic care, emergency services, checking of
temperature, weight, blood pressure etc. Will GST be applicable on such money retained by the hospitals?

(3) Food supplied to the patients: Health care services provided by the clinical establishments will include
food supplied to the patients; but such food may be prepared by the canteens run by the hospitals or may
be outsourced by the Hospitals from outdoor caterers. When outsourced, there should be no ambiguity that
the suppliers shall charge tax as applicable and hospital will get no ITC. If hospitals have their own canteens and prepare their own food; then no ITC will be available on inputs including capital goods and in turn if they supply food to the
doctors and their staff; such supplies, even when not charged, may be subjected to GST.

Health care services provided by a clinical establishment, an authorized medical practitioner or para-medics are exempt. [Sl. No. 74 of notification No. 12/2017- CT(Rate) dated 28.06.2017 as amended
refers].(1) Services provided by senior doctors/ consultants/ technicians hired by the hospitals, whether employees or not, are healthcare services which are exempt.(2) Healthcare services have been defined to mean any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India [para 2(zg) of notification No. 12/2017- CT(Rate)]. Therefore, hospitals also provide healthcare services. he entire amount charged by them from the patients including the retention money and the fee/ payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is exempt.

(3) Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable.

6.

Appropriate clarification may be issued regarding taxability of Cost Petroleum.

As per the Production Sharing Contract(PSC) between the Government and the oil exploration & production contractors, in case of a commercial discovery of petroleum, the contractors are
entitled to recover from the sale proceeds all expenses incurred in exploration, development, production and payment of royalty. Portion of the value of petroleum which the contractor is entitled to take in a
year for recovery of these contract costs is called “Cost Petroleum”.The relationship of the oil exploration and production contractors with the Government is not that of partners but that of licensor/lessor and licensee/lessee in terms of the Petroleum and Natural Gas Rules, 1959. Having acquired the right to explore, exploit and sell petroleum in lieu of royalty and a share
in profit petroleum, contractors carry out the exploration and production of petroleum for themselves and not as a service to the Government. Para 8.1 of the Model Production Sharing Contract (MPSC) states that subject to the provisions of the PSC, the Contractor shall have exclusive right to carry out Petroleum
Operations to recover costs and expenses as provided in this Contract. The oil exploration and production contractors conduct all petroleum operations at their sole risk, cost and expense. Hence, cost
petroleum is not a consideration for service to GOI and thus not taxable per se.However, cost petroleum may be an indication of the value of mining or exploration services provided by operating member to the joint venture, in a situation where the operating member is found to be
supplying service to the oil exploration and production joint venture.

2. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board. Hindi version would follow.

A high-powered group of ministers will meet every fortnight to resolve over two dozen technical glitches identified in the GST tax portal GSTN, the panel’s head and Bihar Deputy Chief Minister Sushil Modi has said.

Over 25-odd glitches, which had led to the GST-Network portal crashing on at least two occasions in the very first month of filing, relate largely to payments and registration, he told PTI after the five-member GoM held its first meeting in Bengaluru on Saturday.

The grouping had extensive interaction with executives of Infosys, which is providing the IT support for the portal, and businesses will notice a “lot of difference” on the GSTN portal in the next 7-10 days, Modi said.

The GSTN website had faced glitches last month as taxpayers flogged to the portal on the last day of the deadline of filing returns for July.

“Over 25 issues have been identified which needs to be resolved and timelines have been set for each of them. Overall, we are satisfied with the performance of GSTN and Infosys is doing its best to make it error free,” said Modi.

The GSTN, the information technology backbone and portal for real-time taxpayer registration, migration, and tax return filing under the GST, had developed a snag last month when the first deadline for filing of returns approached, forcing the government to extend the last date. A five-member GoM was constituted on September 12 after the GST Council decided to sort out technical glitches. The first meeting of the GoM was held in Bengaluru on September 16.

Modi said the GoM noted that the tendency of taxpayers is to file returns on the last day, which is evident from the fact that only 3.5 lakh taxpayers have so far filed GSTR-3B for the month of August. The last date for filing is September 20.

Over 47 lakh returns in GSTR-3B was filed in July and the GST to the tune of Rs 95,000 crore was collected in the maiden month of roll-out.

On September 15, GSTN officials and state commercial tax officers also held meetings with bankers, large taxpayers and tax experts to decipher the procedural issues being faced by them on the portal.

“The GoM will meet every 15 days to review the functioning of GSTN. The GSTN system is robust and load is not an issue. We are considering the procedural issues,” Modi said.

So far, over 22 crore invoices have been uploaded on the GSTN portal, which has a capacity of handling over 3 billion invoices.

GSTR-3B is only a simple return which will ease compliance burden of businesses. Businesses will have to upload invoices and file final returns in form GSTR-1, 2 and 3 on a stipulated date.

The GST Council, chaired by Finance Minister Arun Jaitley and comprising state counterparts, had last week decided to extend the last date for filing final returns for July by a month to October 10. GSTR-2 for July will have to be filed by October 31 and GSTR-3 by November 10.

Currently, there are over 85 lakh registered taxpayers under the Goods and Services Tax regime. This include 62 lakh assessees who have migrated from the excise, service tax and VAT system and another 23.18 lakh new registration.

Among this, 10.96 lakh businesses have opted for composition scheme, under which they have to file returns quarterly.